The Institute of Chartered Accountants of India (ICAI), reprimanded Chartered Accountant (CA) Rajan Sachdeva and ruled that the failure to communicate acceptance of assignments with previous auditors is professional misconduct.
The Respondent being a partner in the Complainants firm along with others had breached the conditions of partnership deed entered into by him with the Complainant’s firm before and after he resigned from the said firm. He accepted the appointments in various entities without first obtaining No Objection Certificate (NOC) from the previous auditor i.e. Complainant firm.
It has been alleged that the Respondent breached certain conditions of the partnership deed both during the time when he was acting as a partner and also after resigning from the Complainant firm.
It was cited that Clause 12 of the Partnership Deed of the Complainant firm which among others, preconditioned upon or prohibits every partner to not to accept any existing or prospective work allotted to or done by the firm or by erstwhile de-merged firms either in their own name or in name of any firm in which he was a partner/ proprietor either directly or indirectly for a period of three years from his retirement or resignation from the firm or by virtue of his ceasing to be a partner of the firm by any reason.
The purpose of communication with previous Chartered Accountant is to ensure that the new auditor has complete knowledge about the affairs of the entity and takes note of any reservation of the previous Chartered Accountant with respect to the books of accounts of the entity.
A Two-Member Bench of the Board comprising CA. Rajendra Kumar P., Presiding Officer and Ms. Dolly Chakrabarty (IAAS, retd.), Government Nominee was of the view that the appointment as tax auditor is for the Firm of Chartered Accountants and not for the partner signing on behalf of the that firm. Thus, it was required by the Respondent’s firm to communicate with the previous auditors (i.e. the Complainant firm) before accepting such assignments.
“Also, the requirement to communicate is applicable in respect of all types of auditees. Therefore, irrespective of the fact whether he was within his rights or not as per the conditions of partnership and retirement deed to accept assignments of ex-clients of the Complainant firm, it is established that he failed to communicate with the previous auditors (Complainant firm) before accepting the said assignments. Therefore, the Board held the Respondent guilty of Professional Misconduct falling within the meaning of Item (8) of Part I of First Schedule to the Chartered Accountants Act, 1949 also in respect of the said charge” the Board concluded.
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